Glossary
With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.
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Rule of Thumb
« Back to Glossary IndexCategory: Business Valuation
In business valuations, the “rule of thumb” is an informal and generalized method used to estimate a company’s value based on industry-specific benchmarks or commonly accepted multiples. Rather than employing rigorous financial analysis, this approach relies on quick approximations, considering factors like revenue, earnings, or other industry-specific metrics. While the rule of thumb can offer a rapid valuation estimate, it may lack precision and fail to capture unique aspects of a business. It is commonly used in industries where standard valuation methods may be challenging or impractical, providing a quick reference point for assessing a company’s worth.
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